Gold prices set for biggest daily gain since 2008 after historic crash. Should you buy?

Gold and silver prices rebounded sharply on Tuesday, with gold set for its biggest single-day rise since 2008, as investors stepped back into precious metals after a two-day sell-off. The rebound comes after gold and silver witnessed one of their steepest corrections in decades last week, driven by aggressive liquidation, higher margin requirements and uncertainty around US monetary policy.

The sharp fall had pushed both metals into deeply oversold territory, setting the stage for a strong technical bounce. In global markets, spot gold rose sharply, recovering from Monday’s lows after slipping well below the $5,000 per ounce mark last week. Silver also surged strongly, bouncing back after recording its largest one-day fall on record on Friday, followed by further losses on Monday.

The sell-off last week was unusually severe. Gold had plunged nearly 10% in a single session, its steepest fall since 1983, while silver collapsed 27% in one day. Over the two trading sessions, gold fell more than 13% and silver nearly 34%, wiping out a large part of their recent gains and triggering margin calls across trading desks.

Tuesday’s recovery reflects renewed buying interest at lower levels and short covering after the sharp correction.

Jateen Trivedi, VP-Research Analyst (Commodity and Currency) at LKP Securities, said gold traded strongly positive as overseas prices surged sharply, triggering upside momentum in domestic markets as well. He said MCX gold rallied above Rs 1,51,000, gaining nearly Rs 8,000 intraday, driven by renewed safe-haven buying and short covering at lower levels.

Trivedi added that US non-farm payrolls and unemployment data later this week will be closely watched, as they remain critical inputs for the US Federal Reserve’s rate outlook and could add to volatility in bullion prices. From a technical perspective, he sees immediate support for gold near Rs 1,45,000, while resistance is placed around Rs 1,55,000.
Silver also saw a sharp rebound after last week’s unprecedented crash, with traders selectively rebuilding positions after the steep fall triggered forced selling and margin hikes.Hareesh V, head of commodity research at Geojit Investments, said gold and silver are showing early signs of stabilisation after last week’s historic sell-off. According to him, investors are reassessing whether the sharp fall was structural or simply an overshoot driven by short-term catalysts. He said the key drivers supporting bullion remain intact, suggesting the correction was largely technical rather than a shift in long-term fundamentals.

Hareesh cautioned that trading could remain choppy in the near term, as markets continue to digest the impact of margin hikes, a stronger US dollar and repositioning linked to developments around the US Federal Reserve leadership. He added that a sustained recovery may unfold gradually, but further liquidation risks would re-emerge only if prices break last week’s lows, which now act as important support levels.

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Aamir Makda, commodity and currency analyst at Choice Broking, said gold has rebounded sharply from recent lows and is currently trading significantly higher. He noted that prices have recovered from key retracement levels, with immediate resistance seen near Rs 1,54,000. A breakout above this level could strengthen upside momentum and push prices towards higher resistance zones in the coming sessions.

On silver, Makda said prices have moved back above important technical levels, and a sustained breakout could lead to further gains ahead. He expects a moderately bullish trend for both gold and silver over the week, provided key support levels hold.

Despite the violent correction seen last week, analysts remain broadly constructive on the medium- to long-term outlook for precious metals. Many point out that even after the sharp fall, prices are broadly back to levels seen just a few weeks ago, underlining how stretched the rally had become before the correction.